8 CHARACTERISTICS OF A BUSINESS

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A business is an organized and strategic effort aimed at meeting consumer needs while making a profit.

It can also be defined as the sum of all activities involved in the production, exchange and distribution of goods and services for profit.

Alternatively, A business can also refer to an organization, commercial enterprise and firm established, controlled and managed to make a profit.

The main goal of most business activities is to earn a profit.

Characteristics Of Business

1. Offers goods or services: Every business activity must offer something of value and this offering could either be a good or service or a combination of both.

Goods are tangible things that can be seen and touched. They almost always result in the transfer of ownership. Goods can be classified as consumer goods and capital goods

A. Consumer goods: These are goods bought by the final consumer and end-user. 

Consumer goods are usually acquired in final form and are intended for immediate consumption.

Examples are personal cars, books, pens, and clothes. etc. Another name for consumer goods is final goods

B. Producer goods: These are goods sold to intermediary users, That is, they are not intended for immediate consumption and made require further processing.

Producer goods made also be for resale. Examples are equipment, raw materials, and automobiles. Another name for producer goods is intermediate goods

Services, on the other hand, are intangibles. One characteristic of services is that they do not necessarily result in the transfer of ownership.

For example. when your lecturer teaches you, he does not transfer the ownership of the lectures to you, he only provides you with value.

Examples of services are insurance, teaching, and transport. All the auxiliary to trade our services.

2. Profit motive: Every business is established to earn profit.

For a profit organization, the profit objective is explicit.

However. For a non-profit organization, the profit-maximization objective is not explicit as social services and welfare take precedence above the profit objective.

That said, non-profit organizations are not expected to run at a loss, instead, they must earn profit. Any business activity that is not earning enough profit would eventually fail.

3. It must be legal: Anything that is referred to as business must be legal.

In fact, Not all profit-generating activities may be classified as a business. The degree of the legality of activity determines whether it will be called business or not. 

Kidnappers and arm robbers are not involved in the business because they are not engaging in legitimate activities, even though they are profit-oriented

4. Involves exchange: Exchange is one of the foundations of business.

The goods or services offered by a business must be capable of being exchanged for something of comparable value.

There is no business activity if this is possible.

This explains why sowing fabric for personal consumption does not qualify as a business transaction because it is not exchanged for something of equal value.

5. It must be continuous: Business is not a one-time activity. A one-time transaction does not constitute business, albeit it may be considered sales.

A business is essentially a reoccurring activity

6. Uncertainty: As we have seen in our world today, business is characterized by several forms of uncertainty.

Even if a business is profit-oriented, it is not certain that there will earn profit. As a result, uncertainty is a characteristic of the business.

7. Creations of utility: The goods or services offered by a business must create utility. That is, the goods and services of the business must satisfy consumer wants.

8. System: Business is a set of interrelated activities consisting of inputs, processes and output

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